Extend wireless with time capsule?

I see mixed info posted on whether you can extend a current wireless system with the new time capsule 3TB

I have a linksys router hard wired to my time capsule and can not seem to get it configured. I tried factory reset, my airport utility finds it, go through other set up, pick extend existing wireless, finds my network, I join it then it just hangs there configuring TC, then says 'encountered problem". After this my airport utility does not even see the TC?

Yes I could just pull out the linksys but because it is located in a different area of the house all together I need it there as TC is with computer and other peripherals.

If the time capsule is hard wired to the linksys router which wireless network are you trying to extend?

I don't think you want to be extending the existing as you are already connected the network. I think you just want to be creating a new wireless network, with the TC in bridge mode. If you use the same SSID and password any of your wireless devices will move freely between the Linksys wifi and the TC wifi.

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okay I tried it this way, the problem now is it has its own wireless and name etc. should this be set as the same as my linksys then? as it shows up on my mac as its own network as well...that is why I was trying to extend it.

Its working fine on its own plugged into TC, and I can get it on my iphone remote app, but it is still not showing up in my itunes is that a config thing as it used to be there?
If this works too then you will have made my day!
thanks.